Industrial policy in Wallonia: A rupture with the past?

One of the main issues facing almost all European regional policy-makers is how to ensure a smooth adaptation of their industrial structure in the fac e of changing societal and technological parameters. In the case of the Bel gian region Wallonia, industrial decline has particularly marked the econom y during recent decades and the need to promote structural change has been a central preoccupation of national and, subsequently, regional governments . At the same time, the highly complex system of governance in Belgium rend ers the definition and application of a coherent regional industrial Policy difficult. This paper explores the development of industrial policy in the Walloon region with particular attention to the period since 1990 and the pertinence of the instruments and delivery mechanisms with respect to the u nderlying structural issues facing the regional economy. The paper is divid ed into four sections: the first offers a historical profile of the industr ial development of the Walloon economy and in particular identifies some of the factors which provoked a serious structural crisis. The section review s the economic impact of the successive Phases of rationalization and diver sification which have taken place since the 1970s and discusses how the ind ustrial strategies adopted by the business sector and supported by the regi onal government have influenced the speed of economic regeneration. The sec ond section considers the complex federal system of government in Belgium a nd how it influences the freedom of action for regional industrial policy. The governance of the economy by the numerous public or semi-public institu tions active in the field of industrial policy is a crucial issue. A critic al review of the main initiatives, instruments and targets of industrial po licy in Wallonia is offered in section three, while the paper concludes by contrasting the Walloon industrial policy with initiatives taken in the nei ghbouring area of South-West Flanders and panders the issue of whether in t he end the key factor arresting the development of Wallonia is the insuffic ient level of 'social capital'(2).